WASHINGTON (Thomson Reuters Foundation) – The financing arm of the World Bank launched a $600 million programme on Wednesday to support lending to women-owned small businesses as part of its drive to promote gender equality and economic opportunities for women.
The Women Entrepreneurs Opportunity Facility will help as many as 100,000 women running small and medium enterprises in emerging markets gain access to financing, the International Finance Corp (IFC) said in a news release.
An estimated $300 billion credit gap exists for women-owned enterprises, according to IFC research. Failure to recognise the credit-worthiness of women, and unfavourable business and regulatory conditions are some of the barriers that impede development of women-owned businesses, it said.
The new facility will extend lines of credit and share risk with local banks in developing countries as a way to support bank initiatives to provide loans to women entrepreneurs, the IFC said.
Inez Murray, chief executive of the Global Banking Alliance for Women, welcomed the initiative, noting that women account for one-third of small- and medium-sized enterprises and yet banks grant them only a fraction of the available credit. This discrepancy exists even though women have proven themselves to be profitable bank customers. They have a better track record than men in repaying loans and a higher savings ratio, plus they purchase a wide range of bank products, she said.
“A lack of awareness on the part of banks and a lack of understanding on how to reach the women’s market are holding back bank lending to women,” Murray said at a White House event on women and economic empowerment to mark International Women’s Day.
Christine LaGarde, managing director of the International Monetary Fund, speaking at the same event said that promoting women’s economic participation will reap huge growth dividends. An IMF study has estimated that half of women globally do not work, making them an under-utilised economic resource, and when they do work, they are underpaid and exploited.
By changing these dynamics, a country can raise its GDP by anywhere from 7 percent to 27 percent, depending on its starting point, LaGarde said. She cited recent initiatives by Japan to promote women in the workplace to help it overcome two decades of very slow growth and huge social costs of an aging population.
Korea is crafting a similar programme, and finance ministers from the Group of 20 leading industrialised and developing countries - anxious to jump start sluggish world growth - adopted a work plan in February to increase and improve women’s participation in the workplace, she said.
The IFC programme is investing $100 million in its new facility for women entrepreneurs, Goldman Sachs Foundation’s 10,000 Women programme is adding $32 million and the IFC expects to garner $468 million from other private and public investors, it said.